the doctor was recently asked if an organization needs a dedicated Sourcing Spend Analytics solution if the organization already has a generic BI tool that sits on top of its ERP or data warehouse. Well, while the answer is No in theory, it’s rarely No in practice. This is because even if the generic platform you have can support (sourcing) spend analysis, chances are it hasn’t been set up for that. And it will need to be (heavily) customized.
So you either need to get a consultancy and do a lot of specialization, or buy a dedicated solution that is ready out of the box — and, preferably, if possible, buy one that is built on top of your BI platform if you bought one (like Tableau or Qlik) that is best in class.
As we noted in our piece last year that asked why do we still have first generation ERP/Data Warehouse BI, most arguments for generic BI have more holes than swiss cheese. As the Spend Master noted himself ten years ago in his classic, but still under-read, piece on screwing up the screw-ups in BI:
- central databases, like the kind favoured by most BI tools, don’t solve the analysis problem
- business analysts should be able to construct BI datasets on their own
- a governance and stewardship program, which is likely the reason for the generic BI platform acquisition, doesn’t actually put any meat on the table
- cleansing is often the problem, not basic analysis & reporting
- BI systems are difficult to use and set up, it is difficult to create ad hoc reports, and it is impossible to change the dataset organization … all the stuff that makes spend analysis, you know, valuable
- BI reports are pretty generic, and not fine tuned to Sourcing, Procurement, or Finance
- BI engines work on one schema — the ERP schema … which is rarely suited to spend analysis
- BI engines expect all of the data to come from the ERP. SA systems don’t.
- The ability of first (and even second generation) BI engines to create arbitrary reports is considerably overstated.
Hopefully someday soon CPOs and CFOs alike will get the point that if you want to do proper Sourcing and Procurement Spend Analysis, you need a proper Sourcing and Procurement Spend Analysis Solution.